Question

What is the Funding Gap? and why does it exist? (Consider both demand-side and supply-side factors)

Answer 1

Funding Gap:(Definition)

A funding gap is the amount of money needed to fund the ongoing operations or future development of a business or project that is not currently provided by cash, equity or debt. Funding gaps can be covered by investment from venture capital or angel investors, equity sales, or through debt offerings and bank loans.

The term is most often used in the context of early-stage companies during the initial stages of research, product development and marketing.

Funding Gap EXISTS because (consider a startup company), at the very early stage, the company wont know what its full operating expenses will be until it reaches a more mature stage and when, at first, there aren't likely to be any meaningful revenues coming in.

Government entities and agencies may face funding gaps if the allotted budget for a fiscal period does not include sufficient money to pay for the regular operations and duties of the agency. If schools face funding gaps, they may be forced to eliminate classes, extracurricular activities, instructors, or administrators in order to continue operating.

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